Chipotle Mexican Grill Faces Civil Lawsuit After E. Coli Outbreak

• comments
• 
• 

After the massive salmonella, E. coli and norovirus outbreaks that hit Chipotle Mexican Grill, the company has faced declining sales and customer lawsuits. Now, Chipotle is again facing another hurdle as investors are suing the Mexican restaurant company.

According to a report from Fortune, the newest addition to the string of lawsuit was filed on Friday and named Chipotle's CEOs Steve Ells and Monty Moran as defendants in the lawsuit. The investors, who bought shares between February and January 2015, are seeking compensation for misleading them of the company's food safety.

Susie Ong, an investigator at the U.S. District Court in Manhattan, said that the lawsuit claimed that Chipotle did not give full transparency to its investors that its "quality controls were not in compliance with applicable consumer and workplace safety regulations." Furthermore, the lawsuit said that the popular Mexican cuisine restaurant made "false and misleading statements." Ong also stated that according to the filed suit, “Chipotle’s quality controls were inadequate to safeguard consumer and employee health."

A report from Chipotle Mexican Grill, via The Street, notes that before the outbreaks, Chipotle had promising sales, increasing by 20 percent. However, in the past few months since the outbreaks occurred, Chipotle's net operating cash flow took a dip by 0.99 percent or $187.43 million, which is below the industry average. However, the outlet concludes that even though Chipotle's earning have sharply declined over the last quarter and investors are not paying too much attention, the company's products cannot still be considered "cheap and attractive" and "is still more expensive than most of the other companies in its industry."

The lawsuit is the latest blow for Chipotle after the company reported earlier this week that their sales declined and, on Monday, received a subpoena in a federal criminal probe for the norovirus outbreak that happened in California.

Take Part reports that one of the company's CEOs, Ells, has already made numerous public apologies for the various outbreaks across different states, which made customers ill. Furthermore, Chipotle has already made a major overhaul on its protocols on food safety. There are currently more than 350 people in 10 states that were affected of Chipotle's salmonella, E. coli and norovirus outbreaks, but there are no reports of death due to the incidents.

Regarding the recent lawsuit, Chipotle's spokesperson Chris Arnold declined to comment and said that the company's policy requires Chipotle from speaking out during legal proceedings.